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Teachers Insurance and Annuity Association (TIAA)

Teachers Insurance and Annuity Association (TIAA) — is an association providing insurance and investment for people working in the area of medicine and education (teachers, professors, medical workers). The company was created in 1918. Currently, is one of the largest investment advisor companies. The first name was Teachers Insurance and Annuity Association-College Retirement Equities Fund (TIAA-CREF). 

Development of Teachers Insurance and Annuity Association (TIAA)

TIAA aimed to replace the pension which the Carnegie fund has been providing for the advancement of teaching. When the initial amount of money in the fund wasn’t sufficient, Teachers Insurance and Annuity Association was developed as an insurance company. This company should be providing the income via fixed premiums and guaranteed deferred annuity contracts.

The organization was created in 1918 as the funded system of pensions. The financing was provided by the grants of Carnegie center and the current contributions from participating institutions and individuals. In 1921 the professors were permitted to manage the organization. The conservative investment helped TIAA to survive during the Great Depression and the period of total unemployment.   

After the second world war, the sudden expansion of the educational sector increased life expectancy, and growing inflation made the participants of TIAA review the policy of fundraising. The management understood that the participants of the fund should invest in the shares to diversify their pension funds. That’s why they founded the variable annuity College Retirement Equities Fund (CREF) in 1952. CREF helped the professors to invest in the stock market through the country's first variable annuity.

Today Teachers Insurance and Annuity Association (TIAA) is the biggest firm with a tax-protected annuity plan financed by employers. TIAA defines the contribution of a retirement plan for educational and charitable organizations. Also, Teachers Insurance and Annuity Association offers Keogh plans. The contributions from these plans are typically invested in the company's traditional or variable annuities or its line of mutual funds. Keogh plan is the tax-deferred retirement plan for self-employed people and unincorporated companies. There are two types of Keogh plan: defined-benefit plan and defined contribution plan.    

In 2016 the organization changed to TIAA because the new name was more brief and easy to understand. Currently, Teachers Insurance and Annuity Association has become the largest investor in agriculture and the second commercial real estate manager in the world.

Also, the company provides the mobile application for constant access to the services. It is available in the App Store and Google Play. TIAA has developed a special guide, if the participant of the program is a victim of domestic violence. This guide is aimed to protect the personal information of a victim.

Retirement Plans of Teachers Insurance and Annuity Association (TIAA)

To select the retirement plan, the individual should log in to the account on the company’s site. There, they can watch all the products and communicate with the manager and support service.  

There are three basic types of retirement plans: 

  • Plan for employees. They can enroll in the retirement plan of their company. The company may enroll the workers in the retirement plan of TIAA. Also, they can enroll online themselves or ask the employer to enroll them. An individual can deposit up to $19.500 or $26.000 if they are over 50.
  • Plan for individuals without retirement plans. In this case Teachers Insurance and Annuity Association offers the individual retirement account (IRA). A person can open the standard IRA, Roth IRA, and IRA rollover. 
  • Plan for small business owners. TIAA offers Simplified Employee Pension Plan (SEP-IRA) and Savings Incentive Match Plan (SIMPLE IRA). 

    Opportunities of SEP IRA and SIMPLE IRA:  

SEP-IRA

SIMPLE IRA

Suits for self-employed persons and small businesses.

Suits for self-employed persons and medium businesses.

Only employers can contribute. 

Employers and workers can both contribute.

Without annual tax filing.

Without annual IRA fees. A small amount of paperwork. 

Teachers Insurance and Annuity Association (TIAA) and Charges

In 2021 TIAA’s subsidiary was charged with offering the services at an overvalued price and had to pay compensation. This misleading practice was revealed in 2017 by the ex-employees of TIAA and described in an article in the ''New York Times''. The ex-employees confirmed that the sales department deliberately misled customers and imposed unnecessarily expensive services on them. These actions were deemed to be misleading. 

In response to these accusations, the company has changed several inner procedures (compensations for selling different products) and the marketing policy. Also, the company promised to follow strict fiduciary standards and explain the difference between the products more clearly to customers.  

Currently, the company status is reputable. However, it is better to study all the products of a company attentively before enrolling in a certain program. 

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